New clean power plan's effect on Indiana electric rates still hazy

How regulations to reduce carbon emissions will affect prices unclear to industry experts.

(Elkhart Truth File Photo)

Jeff Parrott

Posted on Aug. 20, 2014 at 9:47 p.m.

New federal regulations aimed at reversing climate change by reducing carbon emissions into the atmosphere could hit coal-dependent Indiana hard, but it’s too soon to know for sure, an expert told the South Bend Rotary on Wednesday, Aug. 20.

The U.S. Environmental Protection Agency’s Clean Power Plan calls on Indiana, which draws about 88 percent of its electric power from coal, to reduce its carbon emissions 20 percent by 2030. But energy consultant J. Winston Porter, who was the agency’s No. 2 man during the Reagan administration, said he thinks Indiana electric utilities will convert coal plants to burn natural gas, which releases fewer emissions.

"Coal is the inexpensive fuel, but natural gas is closing in on it,” Porter said.

The nation’s natural gas supply is rapidly growing because of increased petroleum drilling in shale deposits, in a practice called “fracking,” which is causing environmental controversy of its own. Porter noted that natural gas prices could spike if too many power plants convert from coal to natural gas and if the United States exports too much natural gas, another growing trend.

Kathleen Szot, spokeswoman for NIPSCO, the electric utility serving Elkhart County, said the proposed regulations could result in higher electric bills for its customers, but that picture won’t become clear until the regulations have been finalized, and she doesn’t know when that will happen.

NIPSCO operates two coal-burning plants in Indiana, one in Michigan City and one in Wheatfield. Szot said the technology exists to convert them to natural gas, but she wouldn’t speculate on the likelihood that will happen.

"Natural gas has been a good avenue for us and it’s something we’ll continue to explore,” Szot said.

Despite the potential for natural gas to save the day, Greater Elkhart Chamber of Commerce president and CEO Kyle Hannon, who attended Porter’s talk, said people should brace for higher electric bills.

"I cannot see any way our rates will not go up,” Hannon said. “The alternative energy is great but it’s more expensive. I think businesses and homeowners need to expect this. This is the cost of the war on climate change. I’m not saying we shouldn’t do it.”

Hannon said in addition to the cost of electricity rising for households and businesses, he fears the regulations will hurt Indiana’s ability to attract new industries and people. Affordable power, relative to that on the East and West coasts, has always been a drawing card for economic development in Indiana and the Midwest, he said.

Hannon said he was struck by a point Porter made about China’s growing use of coal as an energy source. The country is bringing a new coal-burning power plant online every two or three weeks, unlike the United States, which hasn’t launched a new plant in years, and yet China is doing little to scrub the plants’ stacks to reduce air pollution.

“Some people have asked, what good is it doing?” Porter said of the Clean Power Plan. “I’d like to see them slow down a bit (on the regulations). If we’re just going to be sending more of it to China, I’m not sure that we’re doing much good.”

Porter said the regulations could still change significantly.

"I’m seeing a lot of pushback in Washington and elsewhere from the big coal companies and the utilities, so who knows,” he said. “Everything is political in one form or another.”

Szot was asked how hard NIPSCO is lobbying to influence the regulations.

"I wouldn’t say influence as much as provide information on our energy strategy and the effects of the changes,” she said.

Hannon said he raises the issue with state legislators and the area’s congressional delegation, and he’ll continue doing so.

"This has moved past a Republicans and Democrats argument and moved into a regional argument,” Hannon said. “We’ve got the West and the Midwest against the coasts. Our delegation is very aware of this.”